Government statistics are complete but are just estimates, while manager surveys are based on expectations and not just hard orders. The Panjiva Combined Cargo Index for the U.S., including four regional components, by contrast is based on real-world activity. It brings together seaborne cargoes and airfreight data to create a monthly index of actual goods shipments.

The most recent reading, for November, showed activity increased 4.7% on a year earlier to reach an index of 127.6. This was marginally below the all-time high of 127.6 reached in October, which is the result of seasonality in shipments ahead of the holiday shopping season. On a 12 month trailing average basis the index increased just 1.4% on a year earlier, reflecting the weak start to the year.

U.S. IMPORTS ACCELERATING ACCORDING TO PCCI

Panjiva Combined Cargo Index is an average index of U.S. seaborne import shipments and total international freight handled by eight U.S. airports. Final version includes a further nine airports that report after the end of the following month.Source: Panjiva

2.Trade Growth in the Face of Adversity?

Government statistics on trade are typically estimates rather than reality, and frequently need to be revised. However, they form the basis of the political debate on the merits of trade, and so will be critical in 2017. Panjiva research tracks the trade activity of 23 countries, but it is likely to be the U.S. and China that are the most important in 2017.

Panjiva analysis shows that while U.S. imports increased 2.7% in November on a year earlier, and exports inched ahead by 0.8%, on a 12 month rolling basis they are 2.6% and 4.5% lower than the same period a year before. Yet, despite the significant policy uncertainty surrounding U.S. trade policy, economists surveyed by Bloomberg expect growth in imports to accelerate to 3.3% in 2017 and 4.4% in 2018, while exports are seen expanding 2.4% and 3.0%.

China is in a similar position – exports increased 0.1% in November, but are down 5.3% on a 12 month basis, with economists expecting a recovery to 2.0% growth in 2017 and 3.8% in 2018. The net effect would be that the U.S. annual goods deficit could rise 12.7% to $817 billion by the end of 2018, and China’s surplus by 10.1% to $747 billion.

TOO SOON TO BE GREAT AGAIN?

Upper panel shows change on year earlier in 12 month trailing total imports and exports for U.S. as well as imports and exports for China. Lower panel shows trailing total goods surplus. Calculations beyond November 2016 based on economists’ consensus expectations gathered by Bloomberg. Source: Panjiva

3.Mixed Messages from the Shop Floor

Long-term economic forecasts, such as those from the OECD, discussed in Panjiva research of November 28, are based on broad assumptions about trade relations. Manager surveys, by contrast, are driven by on-the-ground experience and can provide a good guide to near-term trade moves. The most recent surveys show divergent opinions both globally and within regions – this likely reflects the sensitive balance of economic and trade policy factors going into the end of the year.

U.S. managers have had a stable, positive outlook since March, whereas directors in China have been more-or-less neutral having fallen modestly in December. In Europe German managers continue to expect exports to expand, and if anything became more optimistic in the most recent survey. Both British and French managers expect contraction, though the former have become more pessimistic recently.Yet, Japanese managers are the most pessimistic globally. The most recent Tankan survey showing a net 12% of companies expect a contraction in exports from the worst conditions since 2009.

MORE, OR LESS HAPPY AND MORE, OR LESS SAD

Calculations based on data from ISM, INSEE, CBI, IFO and CFLP. ISM and CFLP data has 50 subtracted to fit common axis for European surveysSource: Panjiva